Microsoft Word bal paper with addendum doc

III. National System of Innovation as economic development tool 

III.1 Introduction 

In the earlier sections of this paper we have argued for a definition of the national innovation 

system where there is a core of firms that organise innovation in-house and interact with each other 

and with the knowledge infrastructure in the process. We have also argued that human resources, 

organisational forms and social capital (wetware, orgware and socware) are crucial for the process 

and especially for the impact of technical innovation on economic performance. Finally we have 

pointed out that this core is embedded in a broader national socio-economic setting (education 

systems, labour markets, financial markets and welfare regimes). 

On the basis of empirical analysis we demonstrated that innovation may be the outcome of two 

different but complementary modes of innovation – the STI-mode and the DUI-mode. We also 

demonstrated that the forms that the constellations of human resources, organisational forms and 

social capital that support innovation are overlapping with those that promote adaptation and 

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learning. We summarised these observations in the concept national systems of innovation and 

competence building.   

 

In this last section of the paper we will try to demonstrate that the application of this broad 

innovation system concept on economic development may be useful but also that doing so makes 

more visible some general weaknesses of the concept and gives strong incentives to develop it 

further. In the development context it becomes clear that we need to understand better the formation 

of as well as the openness of national systems. We also need a better understanding of the role of 

power relationships as well as the broader institutional context supporting competence building.